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Krenar Komoni, founder and chief executive officer of Tive Inc., reveals some surprising facts about the progress of supply-chain visibility — or lack of it.
SCB: What’s the most interesting trend you’re seeing right now as it relates to supply-chain visibility?
Komoni: The trend we're seeing — and it’s a bit of a surprise to me, because I thought it wasn’t going to happen — is around compliance of supply-chain visibility. Some of the largest CPG and beverage companies in the world have pulled all this data around telematics from trucks and electronic logging devices, yet their compliance may be around 30% to 40%. They don't know where two-thirds of their shipments are in real time.
SCB: How is that possible? You would think the technology is supposed to virtually ensure 100% pinpoint tracking capabilities, yet why are they falling so short?
Komoni: It has to do with two things. One is carrier fragmentation. There are half a million or more trucking companies in the U.S., and more than a hundred thousand in Europe. Onboarding those carriers has been a challenge, especially with regard to pulling data from all of them. The second reason has to do with incentives for the carrier. The carrier knows the shipper needs him. The truck is still going to show up pick up the load, but it doesn't have the incentive to actually share that data, and be on time to provide that data.
SCB: Let's take the first point. You say there are hundreds of thousands of carriers out there, yet if we apply the 80/20 rule, and a small number of big carriers are hauling most of the freight, would you say they’re doing better on compliance than the smaller ones? Or are they having problems as well?
Komoni: The larger carriers are definitely doing better, especially the ones that own their assets. But if you think of a large third-party logistics provider, which potentially doesn't own assets, it still has to subcontract to many other carriers. They’re trying to be compliant for their customer, but they still can't.
SCB: On the incentive side, I suppose that holds true when capacity is difficult to come by. In a carrier's market, they can behave that way, but when it goes the other way, they suddenly have an incentive to do a better job, right?
Komoni: That could definitely happen, although we haven’t seen it that much. There's always a shortage of truckers. Carriers know that they need to provide service, but they're not incentivized to share data. For instance, my father-in-law has a trucking company, and one of his drivers doesn't want to install the app, for whatever reason. What's the incentive for my father-in-law firing him? He can do that, but how do you find the next truck driver when there's so much of a shortage?
SCB: How do you see the evolution of customer needs changing around the issue of visibility?
Komoni: Think of the evolution of supply-chain visibility. In the beginning, maybe 30 or 40 years ago, customers didn't know where anything was. Then came the first generation of visibility: "I know that the shipment has left the warehouse, arrived at the port, left the port, arrived at a distribution center." The second generation was, "Let's figure out where the assets are." With the trucks, airplanes and vessels, we hit a barrier with compliance. The next trend we're seeing, the third generation, is getting visibility of the actual load. I think it's going to get better over time, but we'll never get to 100% compliance and visibility.
SCB: What kind of technological advances do you anticipate to support this evolution toward increased compliance and visibility?
Komoni: I’d like to answer that with an analogy. Think of what happened to the cable companies. Back in the day, the way to watch content was through cable TV. Now there are these HDMI sticks that go on behind your TV, and you just plug them in to see the content. You go to Netflix or Amazon Prime, and you're skipping the cable companies. Shippers are realizing they could do the same thing with their shipments. Instead of relying on telematics data, or whether the driver has installed a smart phone app, they could put sensors on the goods and get that data directly, regardless of mode or who's driving that load.
SCB: We throw around the word "disruption" to mean anything we want it to mean. But this really sounds like disruption.
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